2025-07-24 05:04Summary of Conference Call on CCL Supply Chain and Related Companies Industry Overview - The conference call focused on the Copper-Clad Laminate (CCL) industry, particularly in relation to AI infrastructure and electric vehicles (NEV) applications. [1][2] Key Companies Discussed - Grace Fabric (603256.SS): Largest manufacturer of ultra-thin glass fabric in China, serving as an upstream material for M6-M9 CCL used in high-speed PCBs. [1] - Shengyi Technology (SYTECH): Notable for its strong performance in AI-related CCL manufacturing, with a projected earnings growth of 52.8% year-over-year for 1H25. [2] - Kingboard Laminates Holdings (KBL): Expected to see slower growth compared to SYTECH, with a forecasted revenue growth of 16% for 1H25. [3] Core Insights - AI and NEV Driving Growth: The CCL industry is expected to experience a growth cycle driven by AI infrastructure and NEV applications, with AI-related CCL projected to account for over 10% of total capacity in 2025, up from low single digits in 2024. [2] - Performance Dispersion: There is an anticipated dispersion in performance across the CCL cycle, with AI-infra CCL expected to show the strongest momentum, followed by NEV applications. Other sectors like home appliances and smartphones are expected to recover modestly due to macroeconomic softness. [1][2] - Grace Fabric's Competitive Edge: Grace Fabric claims to be the only Chinese manufacturer capable of producing low Dk-2 fabric, which is currently in short supply. This positions them favorably against global competitors like Nittobo. [5] - Revenue Projections: Grace Fabric anticipates record-high revenue of RMB 1.2 billion in 2025, with a net margin of over 20%. [6] Financial Highlights - SYTECH's Financial Performance: SYTECH reported a significant increase in earnings due to higher average selling prices (ASP) and gross margin expansion, primarily from AI-CCL contributions. [2] - KBL's Financial Outlook: KBL's revenue is projected to reach HK$10 billion for 1H25, with core earnings expected to grow by 19% year-over-year. However, KBL's growth is limited due to minimal exposure to AI. [3] - Market Preferences: Analysts prefer SYTECH over KBL and KBH based on higher AI exposure and growth potential. [3] Additional Insights - Technological Barriers: The shift towards AI applications has raised technological barriers in the CCL industry, creating a competitive moat for companies that can adapt to these new requirements. [7] - Customer Base: Grace Fabric's top customers include major players in the CCL market, such as Unimicron and EMC, indicating a strong market position. [5] Risks and Considerations - Market Risks: Potential risks include slower-than-expected recovery in consumer electronics, lower GDP growth in China, and fluctuations in oil prices that could impact demand. [19][24] - KBL's Stock Pressure: KBL may face stock pressure due to reduced shareholding by KBH aimed at lowering net gearing. [3] This summary encapsulates the key points discussed during the conference call, highlighting the dynamics within the CCL industry and the performance outlook for the involved companies.